主题：12/19/2009 Market View -- 宁子

A shortened week for Christmas and then again the following week for New Years. Not going to give us a very good look at the market's strength given trade will be light. That does not mean, however, we won't see movement and won't get the opportunity to make some money.

The market has a couple of things going for it to take it through the holidays and on into the New Year. First are the technical underpinnings. Ever since the November low the market has changed. First, even as the indices made new lows for the year, the new lows count did not make new highs for the year. First sign the market was getting sold out. Off of that bottom the price/volume action improved as stocks rallied on strong volume and tested lower volume. With that action the indices started by making a higher low, a higher high, a higher low, and in the case of the smaller indices, a second higher high.

That is all well and good, but it does not amount to a hill of beans unless there are stocks in good position to take on the leadership role. It is critical for any rally attempt to have leadership. Several rally attempts during the 2000-2002 bear market failed due to no leadership at all (just relief bounces from another leg of hideous selling) or no new leadership after an initial spurt. That is one reason this rally is so intriguing even though it is making baby steps (and in a way, baby steps are good because it does not fire off all of its ammunition at once). There is a steady increase in leadership, gaining speed, stepping up to support the early scattered leadership. Infrastructure build-out stocks are improving on all of the Keynesian make-work plans of the new administration (materials, engineering, commodities). That is also part of a re-inflation story given the US Fed's 'all in' push to clear the logjam in the credit markets and US investment. Small business stocks are improving nicely as well, continuing their moves after bolting out to early leadership. Retail continues to perform in the daily gloom you hear about how bad retail sales are this season. Chips have weathered innumerable downgrades to continue higher and actually turn SOX into a market leading index. Insurance is setting up nicely as well.

With this leadership improvement we are continuing to look at upside opportunities we can buy into off of the pullbacks leaders are showing after good surges as well as new leaders coming into the ranks and setting up their first breakouts. In this way we can take advantage of the melt upside toward the end of the year even if low volume persists. When we get to year end and the market has put in some more upside we have to evaluate whether we want to take gain off the table ahead of the return of the majority of investors and the jostling that often occurs to start a new year. If we get a nice rise we will be inclined to take quite a lot of gain off the table and then see what the new year brings. First things first. We birddog the stocks that are ready to lead, and if they make their moves we move in and ride them. As noted earlier, even if overall market volume is low on the move, we will likely see some good volume in these smaller individual names.

Support and Resistance

NASDAQ: Closed at 1564.32

Resistance:

1565 is the second low in October 2008

1579 is the 50 day SMA that stalled NASDAQ last week

1603 is the December peak

1620 from the early 2001 low

The 50 day EMA at 1631

1644 from August 2003

1752 from 2004

1782 from August 2004

1786 is the November 2008 high

1886 is the 90 day SMA

Support:

The 10 day EMA is 1545

1542 is the early October 2008 low

1536 is the late November 2008 peak

The 18 day EMA at 1536

1521 is the late 2002 peak following the bounce off the bear market low

1499.21 is the 2008 closing low

1493 is the October 2008 low. Key low.

1428 is the November 2008 low

1398 is the early December 2008 low

1387 is the 2001 low

1295 is the November 2008 low

1253 is the March 2003 low on the test of the rally off the 2002 bear market low

1108 is the 2002 low

S&P 500: Closed at 887.88

Resistance:

889 is an interim 2002 peak

896 is the late November 2008 peak

899 is the early October closing low

919 is the early December peak

The 50 day EMA at 928

965 is the 2003 consolidation low

995 from June 2003 consolidation peak

1008 is the November 2008 peak

1065 is the Q4 2003 level that SP500 started the run to 2007 after the first run in the recovery.

Support:

The 10 day EMA at 886

The 18 day EMA at 883

866 is the second October 2008 low

853 is the July 2002 low

848 is the October 2008 closing low

839 is the early October 2008 low

815 is the early December 2008 low

818 is the November 2008 low

800 is the March 2003 post bottom low

768 is the 2002 bear market low

741 is the November 2008 low

650 on the top and 625 on the bottom of a 7 month range in 1996

475 from 1994 where the market moved laterally for the entire year.

Dow: Closed at 8579.11

Resistance:

8626 from December 2002

The 18 day EMA at 8638

The 10 day EMA at 8658

The 50 day SMA at 8702 stopped the Dow on the prior bounce

8829 is the late November 2008 peak

8934 is the December closing high

The 50 day EMA at 8953

8985 is the closing low in the mid-2003 consolidation

9200 is the July peak in the 2003 consolidation

9323 From June 2003 peak

9575 from September 2003, May 2001

9654 is the November 2008 peak

Support:

8521 is an interim high in March 2003 after the March 2003 low

8451 is the early October closing low. Key level to watch.

8141 is the early December low

8197 was the second October 2008 low

8175 is the October 2008 closing low. Key level to watch.

7965 is the November 2008 intraday low.

7882 is the early October 2008 low. Key level to watch.

7702 is the July 2002 low

7524 is the March 2002 low to test the move off the October 2002 low

7449 is the November 2008 low

7282 is the October 2002 low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

December 23 - Tuesday

Q3 Chain Deflator-Final (8:30): -4.2% expected, 4.2% prior

GDP-Final, Q3 (8:30): -0.5% expected, -0.5% prior

Existing Home Sales, November (10:00): 4.93 expected, 4.98 prior

Mich Sentiment-Rev. , December (10:00): 58.6 expected, NA prior

New Home Sales, November (10:00): 420K expected, 433K prior

December 24 - Wednesday

Initial Jobless claims (8:30): 575K

November Durable Orders (8:30): -3.1% expected, -6.2% prior

Person Income, November (8:30): 0.0% expected, 0.3% prior

Personal Spending, November (8:30): -0.8% expected, -1.0% prior

Crude oil inventories (10:30): 525K prior